How to Navigate Manufacturing Trends and Tariff Impacts

𝗧𝗮𝗿𝗶𝗳𝗳𝘀 𝗮𝗿𝗲 𝗯𝗮𝗰𝗸. 𝗕𝗶𝗼𝘁𝗲𝗰𝗵 𝗶𝘀𝗻’𝘁 𝗿𝗲𝗮𝗱𝘆. The first real trade shock since COVID is hitting, and CDMOs and biotechs are still using playbooks built for stability, not volatility. Tariffs and trade controls are exploding across major economies. Supply chains once optimized for cost are now liabilities. You’re flying blind f your team doesn’t have a geopolitical nerve center. Here’s what I’m seeing from the frontlines: 🧭 𝗚𝗹𝗼𝗯𝗮𝗹 𝘀𝗼𝘂𝗿𝗰𝗶𝗻𝗴 𝗶𝘀 𝗳𝗿𝗮𝗴𝗺𝗲𝗻𝘁𝗶𝗻𝗴: What used to be a question of price is now a question of access and exposure. APIs, consumables, and critical reagents are crossing multiple borders and one policy shift can disrupt an entire production run. 📦 𝗖𝗗𝗠𝗢𝘀 𝗮𝗿𝗲 𝗯𝗲𝗶𝗻𝗴 𝗮𝘀𝗸𝗲𝗱 𝘁𝗼 𝗱𝗼 𝘁𝗵𝗲 𝗶𝗺𝗽𝗼𝘀𝘀𝗶𝗯𝗹𝗲: Absorb upstream tariff costs, accelerate timelines, and maintain pricing. Spoiler: You can’t do all three without strategic trade modeling. 📉 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗮𝗿𝗲 𝘄𝗮𝘁𝗰𝗵𝗶𝗻𝗴: If your biotech isn’t proactively assessing tariff exposure across your suppliers, your CDMO partners, and your revenue markets, you’re not protecting your burn rate, let alone your valuation. So what do the smart operators do? They build trade resilience across three timeframes: 𝗡𝗼𝘄: Fix customs delays, optimize bonded warehousing, and rethink safety stock. 𝗧𝗵𝗶𝘀 𝘆𝗲𝗮𝗿: Engage regulators, clean up HTS code classification, and model cross-border cost impacts. 𝗡𝗲𝘅𝘁 𝗻𝗼𝗿𝗺𝗮𝗹: Rethink your global manufacturing footprint. That low-cost producer may cost you more in volatility than they save you in dollars. This isn’t just a logistics problem...it’s a C-suite, investor, and board-level problem. If your strategy doesn’t account for trade disruption, you don’t have a strategy, you have a spreadsheet that’s about to get blown up.

I have a new first question for every CPG founder I speak to: How are you (or might you be) affected by the tariffs? Unacceptable answers: ❌ "We're not worried about it." → You should be. Tariffs impact pricing, margins, and supply chain risk. If you haven't analyzed them, that's a red flag. ❌ "I don't know yet." → You don't need perfect answers, but you should be able to estimate based on your current materials and supply chain, and you absolutely must have a plan to get them. ❌ "We'll figure it out if/when it happens after the 90 days." → That's reactive. Investors fund proactive founders who get ahead of problems. ❌ "Our manufacturer/distributor/importer/supplier will handle that." → You're responsible for your unit economics. Push for real answers. You can't wave this away. Acceptable answers are: SOURCING MATERIALS: -My raw materials are sourced from [country], and the current tariff is X% and possibly going to Y%. This will change my margins from A% to B% in a worst-case scenario. - I source my materials from an importer/distributor/supplier, and I've asked them for exact figures. Early calculations show a decline in my gross margin from X% to Y%. MANUFACTURING: - We manufacture in the US and aren't directly impacted, but our packaging components are sourced from [country] and will increase costs by $C. - We're currently offshore. We've run models on relocating to a US partner. Costs would rise by $C per unit and delay production by 4–6 weeks. - We manufacture offshore and plan to continue doing so. Our landed cost will increase by $C per unit due to new tariffs. We've modeled this into our margin assumptions and adjusted pricing, sourcing, and volume targets accordingly. EFFECT ON RETAIL PRICE: - We're raising prices to protect margin, and we believe we can hold demand because we are a premium product/were low to begin with/have a sticky customer base. But we're reducing forecasted units by X%, and we'll hit profitability Y months later. - We're holding prices and accepting lower margins. It's going to slow our path to scale by Z months, and I've updated our capital plan accordingly. ALTERNATIVES: - We've researched new suppliers/manufacturers in A, B, and C. Our best options are [A, B, or C] in the short term and [A, B, or C] in the long term. We've implemented a quarterly sourcing review process to avoid surprises and stay proactive. CASH FLOW IMPACT - Tariffs increase our landed cost by X%, which changes our inventory strategy. We now need $Y more in working capital per order cycle. This shortens our runway by Z months and changes our next raise to A. Of course, these aren't the only acceptable answers, but please note what the acceptable answers have vs. the unacceptable: - Detail - Specific Data - Research-Backed Estimates If you haven't done this work, I suggest preparing this before pitching. PS - Reach out if you need a good fractional CFO recommendation to help you with this. I have several.

As Tariffs Disrupt the Flow, 4 Supply Chain Moves Every Executive Should Make: Tariffs aren’t just a trade issue, they’re a leadership one. As an executive coach, I work with leaders navigating disruption to become more effective in how they think, decide, and lead so their organizations and teams perform at the highest level. Right now, global supply chains are under pressure from shifting tariffs, reshoring mandates, and geopolitical realignment. What used to be a smooth, just-in-time operation is now a daily exercise in adaptability. Here are four strategic shifts every executive should be considering: 🔍 1. Audit Hidden Dependencies Most leaders track Tier 1 suppliers—but disruptions often originate in Tier 2 or Tier 3. Map the full supply chain to understand where risks lie beyond what’s immediately visible. 🌎 2. Go Beyond “China-Plus-One” Relocating from China to Vietnam or Mexico may ease tariff exposure, but true resilience requires a multi-regional approach. Diversify sourcing and distribution to withstand geopolitical shocks. ⚙️ 3. Align Procurement with Enterprise Strategy It’s no longer just about cost. Factor in tariffs, political stability, and fulfillment risk. Ensure procurement and strategy functions are working in tandem—not in silos. 🧠 4. Embrace Supply Chain Intelligence AI tools and digital modeling can help you simulate scenarios and plan proactively. Today’s smart supply chains aren’t static—they’re dynamic, data-driven, and decision-ready. Executives who succeed in today’s environment are the ones who build resilience into their operations and clarity into their leadership. Tariffs may be the current headline, but adaptability, foresight, and strategic alignment are the lasting differentiators. If you are looking for a partner to support you in making your supply chain and your leadership more future-ready, let's connect.

𝗖𝗠𝗢’𝘀 𝗣𝗲𝗿𝘀𝗽𝗲𝗰𝘁𝗶𝘃𝗲: 𝗖𝗮𝗻 𝗖𝗣𝗚 𝗯𝗿𝗮𝗻𝗱𝘀 𝗽𝗿𝗼𝘁𝗲𝗰𝘁 𝗺𝗮𝗿𝗴𝗶𝗻𝘀 𝗶𝗻 𝘁𝗵𝗲 𝗻𝗲𝘄 𝘁𝗿𝗮𝗱𝗲 𝗿𝗲𝗮𝗹𝗶𝘁𝘆? (Welcome to 2nd Trump Tariffs Era) Tariffs are back, and they are hitting the bottom line harder than ever. With new trade barriers on China, Canada, and Mexico, CPG brands face a triple threat: rising costs, shrinking consumer demand, and disrupted supply chains. But here’s my question: Are we playing defense, or are we strategically pivoting? From what I can see, data tells us a clear story. Historically, high tariffs = lower trade competitiveness. Let's take a look at the U.S. Average Tariff Rates (1821-2016) and trade balance trends: ✅ When tariffs were high (pre-1940s), trade was limited, and the U.S. maintained a surplus. ✅ Post-1945, lower tariffs (via GATT & WTO) fueled economic expansion and trade growth. ❌ After the 1971 Bretton Woods collapse, trade deficits deepened as low tariffs persisted. 🚨 Today, reintroducing high tariffs could lead to cost-driven inflation, supply shocks, and loss of global competitiveness. ++ 𝗪𝗵𝗮𝘁 𝗧𝗵𝗶𝘀 𝗠𝗲𝗮𝗻𝘀 𝗳𝗼𝗿 𝗖𝗣𝗚𝘀 & 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗖𝗼𝗺𝗺𝗲𝗿𝗰𝗲 ++ - Higher Input Costs → Tariffs on raw materials (aluminum, steel, packaging) increase COGS, cutting into margins. - Consumer Price Sensitivity → Higher shelf prices = lower demand. Consumers switch to private labels, local substitutes, or DTC (Direct-to-Consumer) models. - Erosion of Market Access → Retaliatory tariffs make U.S. brands more expensive abroad, favoring European and Asian competitors. - Disrupted Global Supply Chains → Companies must rethink sourcing, warehousing, and last-mile logistics. ++ 𝗖𝗠𝗢 & 𝗖𝗙𝗢’𝘀 𝗣𝗹𝗮𝘆𝗯𝗼𝗼𝗸 𝗳𝗼𝗿 𝗡𝗮𝘃𝗶𝗴𝗮𝘁𝗶𝗻𝗴 𝗧𝗮𝗿𝗶𝗳𝗳𝘀 ++ 1️⃣Pass-Through Pricing? Be Selective. Don’t just raise prices. Instead, optimize pack sizes, value-tiered offerings, and bundling strategies to maintain affordability. 💡Data-driven pricing elasticity is key—test price sensitivity before making abrupt hikes. 2️⃣ De-Risk Your Supply Chain Nearshoring & Friendshoring → Reduce tariff exposure by shifting suppliers to Mexico, Vietnam, and Eastern Europe instead of China. 💡Dual-sourcing strategies ensure supply continuity amid trade wars. 3️⃣ Digital Commerce is the Safety Net DTC & eCommerce are the antidotes to tariff turmoil. 💡Selling via Amazon, Shopify, or localized fulfillment centers avoids tariff-heavy distribution routes. 💡Localized production + micro-fulfillment hubs = reduced cross-border shipping costs. 4️⃣ Work Capital & FX Strategy Matters More Than Ever Hedging currency risks & cash flow forecasting is critical when tariffs disrupt inventory costs. 𝗧𝗼 𝗮𝗰𝗰𝗲𝘀𝘀 𝗮𝗹𝗹 𝗼𝘂𝗿 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗳𝗼𝗹𝗹𝗼𝘄 ecommert® 𝗮𝗻𝗱 𝗷𝗼𝗶𝗻 𝟭𝟯,𝟱𝟬𝟬+ 𝗖𝗣𝗚, 𝗿𝗲𝘁𝗮𝗶𝗹, 𝗮𝗻𝗱 𝗠𝗮𝗿𝗧𝗲𝗰𝗵 𝗲𝘅𝗲𝗰𝘂𝘁𝗶𝘃𝗲𝘀 𝘄𝗵𝗼 𝘀𝘂𝗯𝘀𝗰𝗿𝗶𝗯𝗲𝗱 𝘁𝗼 𝗲𝗰𝗼𝗺𝗺𝗲𝗿𝘁® : 𝗖𝗣𝗚 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗚𝗿𝗼𝘄𝘁𝗵 𝗻𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿. #tariffs #CPG #FMCG #CMO

📦 Navigating Ongoing Tariffs: Strategies for Resilient Supply Chains The impact of ongoing Section 301 tariffs—particularly those targeting U.S.-China trade—continues to challenge global supply chains, especially in high-complexity industries like MedTech and Pharma. For procurement and operations leaders, the question isn’t if tariffs will affect your cost structure, but how prepared your organization is to respond. Forward-looking companies are adopting a multi-layered approach to mitigate tariff risk: ✅ Geographic diversification – Shifting production and sourcing from China to Vietnam, India, Mexico, or Eastern Europe to reduce tariff exposure. ✅ Tariff engineering – Reclassifying product components or altering designs to fit under lower-duty classifications. ✅ Contract restructuring – Negotiating supplier terms to share or offset tariff-related cost increases. ✅ Nearshoring & FTZs – Leveraging free trade zones, bonded warehouses, and regional production models to defer or avoid duties. ✅ Scenario planning – Embedding tariff impact into total cost models and proactively simulating “what-if” supply scenarios. In today’s climate, tariff mitigation is not a one-time event—it’s a strategic discipline. It demands cross-functional collaboration between sourcing, legal, tax, and logistics teams, paired with agile decision-making and up-to-date market intelligence. 🎯 Whether you're reshaping your supplier footprint or designing a more resilient operating model, it's clear that proactive tariff strategy is a critical lever for cost optimization and risk mitigation. 🔍 Want to learn more? Here are some helpful resources: - USTR Section 301 Updates - PwC Trade Insights - Bloomberg Tariff Tracker Let’s connect—what mitigation strategies are working for your organization?

Tariffs, while unpleasant, are just another challenge that business leaders face in the quest to guarantee the best possible performance of their companies. This weekend's #tariffs on Canada (25%, 10% on oil), Mexico (25%), and China (10%), while surprising to many business planners due to their targets, severity, immediate enforcement, and justifications, are no different. Work the problem: 🧠 Assess the immediate impact on your #costs, #profitability, and #pricing. If you haven't done so previously, engage in direct, honest, and transparent conversations with your teams, suppliers, and customers to develop a strategic response. Roll out the plan as quickly and efficiently as possible. 🗺️ Consider the medium-term and long-term implications of protectionist trade policies on your business and explore a comprehensive list of tariff mitigation strategies, including: •Strategic sourcing •Product exclusion requests •Country of origin adjustments •Value reduction/first sale tactics •Foreign trade zones and bonded warehouses •Special Harmonized Trade Schedule (HTS) provisions •Duty drawbacks 💡 Normalize a robust #risk assessment and planning process for your organization. Continuously evaluate diversification of suppliers and manufacturing locations. Conduct financial modeling of all inputs. Evaluate manufacturing process changes. Explore vertical integration and ways to eliminate intermediaries. Assess technology adoption and real time tracking of your supply chain. Don't be tariff-ied - you've got this! 💪

The HVAC manufacturing industry is facing a significant shift as new tariffs on imported materials and components take effect. With President Trump’s recent tariff policies targeting key trading partners, manufacturers must navigate rising costs, supply chain disruptions, and potential market shifts. Here’s what you need to know about how these tariffs will impact the industry and what steps businesses can take to adapt. What’s Happening? The U.S. government has implemented a 25% tariff on imports from Canada and Mexico and a 10% tariff on Chinese imports. These tariffs affect a broad range of products, including steel, aluminum, electronic components, and HVAC-related materials. For HVAC manufacturers, this means that the cost of raw materials and components will likely rise, leading to increased production costs and potential price hikes for end consumers. In addition, retaliatory tariffs from affected countries could further disrupt supply chains and business operations. Key Impacts on the HVAC Industry 1. Rising Material Costs • The HVAC industry relies heavily on imported steel and aluminum, key materials used in heat exchangers, ducts, and structural components. Higher import costs will increase manufacturing expenses.    • Electronic components, sensors, and refrigerant parts sourced from China may see price hikes, affecting HVAC equipment pricing across the board. 2. Supply Chain Disruptions • Tariffs may cause delays in obtaining raw materials, leading to longer production times and potential shortages.    • HVAC companies may need to explore alternative suppliers or shift towards domestic sourcing, which could take time and further increase costs. 3. Higher Prices for Contractors & Consumers • As manufacturing costs increase, HVAC companies may need to pass on costs to distributors and contractors, leading to higher equipment prices.    • Building owners, contractors, and service technicians may face higher project costs, potentially slowing down new installations and retrofits. 4. Market Adjustments & Competitive Shifts • Domestic HVAC manufacturers may gain an advantage if they rely less on imported materials.    • Companies with strong supplier diversification and efficient manufacturing processes will be better positioned to absorb cost increases. What Can HVAC Businesses Do? While the impact of tariffs is inevitable, businesses can take strategic steps to adapt to the changing landscape: ✔ Diversify Suppliers ✔ Optimize Inventory & Forecasting ✔ Explore Alternative Materials ✔ Increase Pricing Strategically ✔ Advocate for Policy Adjustments Final Thoughts The new tariffs present significant challenges for HVAC manufacturers, but with the right strategies, companies can adapt, stay competitive, and continue serving the market efficiently. How do you see these tariffs affecting your business? Are you making any adjustments to your supply chain or pricing strategies? Let’s discuss in the comments.

There was no last-minute deal – the Mexican tariffs are on. Here’s what electronics manufacturing executives must do now: 1️⃣ Dust off your model. If you were on top of it, you’ve already modeled several scenarios – as recently as one month ago. Lock this one in and update with your latest numbers from February and plans for 2025. 2️⃣ Align your team and vendors. You have spent 1000s of hours building models and plans – is it time to pull the trigger on some drastic changes? Whether the answer is “Yes” or “No”, make sure you are proactively communicating with your team, suppliers, and factories to avoid misunderstandings. 3️⃣ Reduce your exposure and optimize. Get trade compliance expertise involved to see how you can leverage valuation, HCS codes, and other tariff engineering tactics to reduce your tariff load. Learn how Chapter 98 exclusions, drawback programs, and renegotiating supplier terms can work in your favor. 4️⃣ Evaluate your 2025 NPI schedules and factory locations. Your models should include a shift in demand due to higher prices (even if you aren’t raising your prices) – how does that impact your portfolio planning for 2025, including NPIs and where you locate them? 5️⃣ Plug into political and legal insights. This issue is about policy, and policy can change on a dime with this administration. Stay connected to industry groups, thought leaders and trade compliance experts to get insights on potential negotiations and changes coming. One of the drastic moves many companies will consider is moving their factories. While I imagine many leaders may want these tariffs to age for a few weeks before pulling those triggers, it’s time to start getting some of the gears in motion. Executive rapid and efficient factory moves is something we’ve developed some expertise in doing – and we’ve been aggregating best practices. DM me if you’d like access. For those who have been through this movie before (in 2018, or otherwise) – what are your top tips to share with the community on what they should be doing right now? #Electronics #Manufacturing #Tariffs #SupplyChain #MexicoTariffs

📦💥 TARIFF WARS: What is your plan when the rules change overnight? What do you do then?   Another day, another tariff. Rare earths? Taxed. Semiconductors? Taxed. Predictability? No more.   If your company depends on a global supply chain, this isn't just noise, it's your new reality. So let's talk strategy, so there's no panic at this cautious time:   ⏰ Audit your exposure as soon as possible → If your list of SKUs is related to China and involves essential inputs (such as lithium, chips or rare metals), expect tariffs. The cost will be higher and you need to be prepared.   🌏 China + 1 is old. China + MANY is the change. → Vietnam, India, Mexico - even Mars, if it's shipped in time. Diversify your sourcing as you do your investment portfolio. You need to keep an eye on all markets to take advantage of opportunities that arise.   📝 Reorganize your contracts. → Tariff clauses are no longer optional. Flexibility is an advantage. That five-year contract with the supplier? Rethink it.   🤝 Bring production closer to the market. → Nearshore. If you sell in the US, build in the US. If you sell in Europe, move closer. Global agility is the name of the game.   💻 Commercial technology is your advantage. → There are AI tools for tariff classification and tax optimization. If you're not using them, customs will - and not in your favor.   ✏️ Redesign the product to avoid the tariff. → Change parts, alter specifications or get creative. Your engineering team loves a challenge. So does your CFO.   🖥️ Create a real-time dashboard. → “Tariff Tracker 3000” isn't just a fun name. It's your visibility tool for material costs, policy changes and delivery times.   Conclusion: The tariffs are here. You can't control the storm - but you can come down hard.   At Drummond Advisors, we support businesses navigating the intersection of tax, trade, and regulation across jurisdictions. Our multidisciplinary team helps clients: ✅ Analyze and document transfer pricing in line with OECD standards ✅ Develop global tax strategies across the U.S., Latin America, and Europe ✅ Minimize the impact of tariffs through trade planning and structuring ✅ Stay compliant - and competitive - in a changing global economy Ready to rethink your global position? Let's connect.   #SupplyChainHumor #TariffTrouble #RareEarths #ResilienceByDesign #GlobalLogistics #ManufacturingLife #SourcingStrategy #TradeWarSurvivalKit

The tariff storm is here. And if it’s not on your risk register yet—add it now. - Supply chains are shaking. - Material prices are increasing. - Budgets are getting squeezed. Looks like we have an escalating trade war on our hands... 📈 Steel & aluminum up 10-25% ⚡ Electrical & HVAC costs jumping 15%+ 🛑 Labor shortages driving wages higher Is your project protected? If you’re not prepared, you’re at risk of unnecessary budget overruns, supply chain issues, and profit loss. That's why I put together a free Tariff Preparedness Checklist—so you can: ✅ Assess your risk exposure ✅ Identify contract gaps ✅ Communicate better with stakeholders Here are the 9 contract provisions you must review immediately: 1. Material Price Escalation ↳ Check if your contract allows price adjustments for rising material costs due to tariffs. 2. Changes in Laws & Regulations ↳ Look how your contract accounts for cost or schedule adjustments when new tariffs or laws impact the project. 3. Delays & Force Majeure ↳ Verify if tariffs and supply chain disruptions qualify as excusable delays under your contract. 4. Change Orders for Tariff-Related Impacts ↳ Confirm whether you can request additional time or money for unexpected tariff costs. 5. Preservation of Rights for Additional Remedies ↳ Know the deadlines and documentation required to claim compensation for tariff-related expenses. 6. Contingency ↳ Determine if contingency funds can be used to offset increased material costs from tariffs. 7. Insurance & Bonds ↳ Check if your contract requires additional insurance or bonding to cover tariff-related cost fluctuations. 8. Termination & Suspension Rights ↳ Understand if you have the right to pause or cancel work if tariffs significantly impact costs or schedules. 9. Dispute Resolution ↳ Study the process (mediation, arbitration, or litigation) for handling tariff-related cost disputes. This is how you protect your project from tariff risks. Most won’t prepare. The ones who do will turn risk into opportunity. I compiled everything I know—compliance tips, risk strategies, and safeguard resources—into a short guide for project managers. It just went out to 6,400+ project leaders in my newsletter. Inside, I break down: - Why these risks matter - What to watch for in your contracts - How to safeguard your project today And more... Don’t wait for tariffs to impact your bottom line. 📩 Grab the checklist here: [Link in comments] How are tariffs affecting your projects? What are you seeing out there? Let’s talk. 👇